Supreme Court sides with FTC in blocking hospital mergers

The U.S. Supreme Court gave some help to the Federal Trade Commission (FTC) on Tuesday, with a unanimous ruling that reinforces the agency’s power to block hospital mergers.

The case at issue involved an FTC challenge to a merger that would have combined two hospitals in Albany, Ga. Lower courts initially sided with the hospitals, ruling that federal antitrust laws didn’t apply to the deal, since the acquiring hospital fell under the auspices of the local county hospital board.

States are usually exempt from federal antitrust laws, and the same exemption sometimes applies to local governments, but only if the state has authorized them to engage in practices that limit competition.

In its ruling, the Supreme Court found that the hospital board in the Georgia case did not have such authority from the state. “There is no evidence the state affirmatively contemplated that hospital authorities would displace competition by consolidating hospital ownership,” Justice Sonia Sotomayor wrote for the court.

Consolidation in the health care industry has drawn FTC attention in recent months, as the number of completed hospital mergers reached a 10-year high in 2011. Federal regulators say that the deals limit competition and drive up health care costs for both patients and insurers, but some experts say that the mergers result in increased efficiency and a wider range of patient services.